Understanding the Personal Liability Insurance in Your Homeowners Policy

To be a responsible homeowner, it’s important to understand every coverage type in your homeowners insurance policy. But over 70 percent of homeowners don’t know how their personal liability insurance works.

To demystify this coverage type, let’s look at what your personal liability insurance does and doesn’t cover – plus how much coverage you might need.

What Personal Liability Insurance Covers

The personal liability portion of a homeowners insurance policy covers damage- or injury-related expenses due to your own negligence.

Here, negligence has a specific legal definition: a failure to act with a reasonable level of care. If someone accuses you of negligence, usually in a lawsuit, your homeowners insurance may pay for your legal costs, as well as any settlement or judgment against you if you are found liable of wrongdoing (up to the limits of your policy).

Covered expenses typically fall into three main categories:

• Legal fees.
• Medical expenses (of a third party accusing you of negligence).
• Repair or replacement of property belonging to the party accusing you of negligence.

What might a covered scenario look like? Let’s say an elderly guest slips and falls in your icy driveway. They suffer a bad leg injury and will face a lengthy – and expensive – recovery process. 

If the injured guest sues, the liability portion of your homeowners policy may cover your legal fees, as well as any medical expenses you’re deemed liable for.

One important thing to understand: your policy may cover legal fees either “inside the limit,” meaning legal fees count toward the total coverage your policy provides, or “outside the limit,” meaning legal fees are covered in addition to your policy’s stated limit.

Note that personal liability coverage isn’t limited to incidents on your property. 

What Personal Liability Insurance Doesn’t Cover

When it comes to unintentional negligence, the personal liability portion of your homeowners policy offers robust protection. But like all coverage types, it has limitations.

A few things personal liability coverage doesn’t cover:

• Intentional damage or injury. If you intentionally injure someone or damage their property, you may have committed a crime. Your liability insurance won’t help you cover associated costs.
• Business-related damage or injury. If you run a small business from home, your homeowners insurance won’t cover any related damage or injury. Instead, you’ll need a small business package to secure adequate insurance.
• Injured members of your household. If you or someone in your household suffers an injury, you may need health insurance to cover medical costs.
• Dog bites from aggressive breeds. Most insurers “restrict” certain dog breeds with a history of aggression – e.g., pit bulls and rottweilers. Your liability insurance likely won’t cover injuries caused by restricted breeds.

Of course, this list isn’t exhaustive. Consider talking to your insurance agent for a more comprehensive list of exclusions.

How Much Personal Liability Coverage Do You Need?

For many homeowners, a standard $100,000 coverage limit may satisfy their needs. But whether you need more coverage depends on your risk of incurring liability claims.

You could be at greater risk if you own:

• A pool. Insurers consider this amenity an “attractive nuisance” – i.e., a hazard that attracts kids. Without safeguards in place, your pool could cause slips, falls, and drowning.
• A trampoline. You could be held liable if someone injures themselves while using your trampoline.
• A dog. If your dog isn’t a restricted breed, you may be liable for related injuries.
• Firearms. Guns can be a deadly liability risk if left unsecured or unattended.

If you own any of these things, it’s likely worth purchasing additional coverage. The good news: that coverage should be relatively cheap.

What if you’ve purchased the maximum coverage available and still need more? In this case, umbrella coverage can help you supplement your liability insurance. Coverage limits are typically $1 million by default. Note that for umbrella coverage to kick in, you’ll need expenses that exceed your liability coverage limit.

WE Can Help You Get to Know Your Homeowners Policy 

DIY research is a great starting point for understanding your personal liability insurance. But to get to know your entire policy, you’ll need professional guidance.

Our independent agents can help you assess your homeowners insurance policy and make sure you’ve got the right coverage. Interested in learning more? WE’d love to chat.

The information contained in this page is provided for general informational purposes only and may not be applicable to all situations. We Insure makes no guarantees of results from the use of this information.